Developing Comprehensive Capital Market Expectations

You are an economist at a global asset management firm, and you have been asked to develop a comprehensive set of capital market expectations for the next five years. In your analysis, consider the impact of central bank monetary policies, geopolitical risks, inflation trends, and emerging market dynamics on both equity and fixed income markets.

Using historical data, current macroeconomic indicators, and forecasts, articulate your expectations for asset classes, including expected returns, volatility, and correlations between different asset classes. Discuss how these expectations will affect strategic asset allocation decisions for a conservative investor profile seeking long-term capital appreciation while maintaining a risk-averse stance.